{
  "title": "Public Debt Indexation and Denomination: The Case of Brazil",
  "publication": "IMF Working Papers, February 1, 1998",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/public-debt-indexation-and-denomination-the-case-of-brazil-2503",
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  "summary": "The paper models the optimal debt management strategy of the public sector when issuing nominal, price-level-indexed and foreign-denominated debt securities.",
  "sections": [
    {
      "heading": "Summary and research objective",
      "content": "- The paper models the optimal debt management strategy of the public sector when issuing nominal, price-level-indexed and foreign-denominated debt securities.\n- The framework is used to analyze the Brazilian experience with indexed debt in the last decade, explaining:\n  - the large increase of indexed public debt in Brazil prior to the 1994 Real plan, and\n  - the steady decline in its use thereafter."
    },
    {
      "heading": "Main determinants of optimal public debt management (model predictions)",
      "content": "- The model predicts the following are the main determinants of public debt management:\n  - the variance of inflation,\n  - the size of the public debt,\n  - the variance of the real exchange rate,\n  - the correlation of inflation with public expenditures."
    },
    {
      "heading": "Key substantive findings",
      "content": "- Indexed instruments (price-level-indexed debt) are central to the analysis alongside nominal and foreign-denominated debt.\n- The model links macroeconomic variances and correlations directly to the optimal composition and denomination of public debt.\n- Historical application: the model provides an explanation for Brazil’s large increase in indexed public debt before the 1994 Real plan and its subsequent steady decline."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subjects: External debt, Financial regulation and supervision, Foreign exchange, Hedging, Inflation, Prices, Public debt, Real exchange rates\n- Keywords: Brazil, composition system estimation, debt, debt holder, denominated debt, exchange rate, Hedging, indexation, indexation mechanism, indexed debt, Inflation, nominal debt, Public debt, Real exchange rates, real value, WP\n\n---\n\n Content in this bundle\n\n- Public Debt Indexation and Denomination: The Case o Brazil -WP/98/18\n  - Public Debt Indexation and Denomination: The Case o Brazil -WP/98/18 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Public Debt Indexation and Denomination: The Case o Brazil -WP/98/18 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/public-debt-indexation-and-denomination-the-case-of-brazil-2503"
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    "Authors: Ilan Goldfajn",
    "Published: February 1, 1998",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451922806.001",
    "The paper models the optimal debt management strategy of the public sector when issuing nominal, price-level-indexed and foreign-denominated debt securities.",
    "The framework is used to analyze the Brazilian experience with indexed debt in the last decade, explaining:",
    "The model predicts the following are the main determinants of public debt management:",
    "Indexed instruments (price-level-indexed debt) are central to the analysis alongside nominal and foreign-denominated debt.",
    "The model links macroeconomic variances and correlations directly to the optimal composition and denomination of public debt.",
    "Historical application: the model provides an explanation for Brazil’s large increase in indexed public debt before the 1994 Real plan and its subsequent steady decline.",
    "Subjects: External debt, Financial regulation and supervision, Foreign exchange, Hedging, Inflation, Prices, Public debt, Real exchange rates",
    "Keywords: Brazil, composition system estimation, debt, debt holder, denominated debt, exchange rate, Hedging, indexation, indexation mechanism, indexed debt, Inflation, nominal debt, Public debt, Real exchange rates, real value, WP",
    "**Public Debt Indexation and Denomination: The Case o Brazil -WP/98/18**"
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